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New York -HSBC Holdings, the British-based banking giant, announced on Friday it will close its subprime mortgage subsidiary in the US, saying it was "no longer sustainable."
HSBC said it will take a goodwill charge of around $880m to close Decision One Mortgage, a unit of HSBC Finance Corporation that originates wholesale non-prime mortgages through brokers.
Restructuring costs will amount to about $65m. The group said both charges will be taken in the second half of 2007.
"This is a small part of our US business," said Michael Geoghegan, chief executive of HSBC Holdings plc.
"It's no longer sustainable and not the right place to allocate capital in the future. We said we would make tough decisions and we have done exactly that."
The HSBC decision comes amid tightening credit in the US mortgage sector and rising foreclosures, particularly in the risky subprime sector, where home loans are given to people with poor credit histories.
The group said HSBC Finance will focus on originating and servicing loans through its consumer lending branch network under the HFC and Beneficial brands.
Approximately 750 Decision One employees will be affected by the closure, it said.
- AFP